Friday Morning Keynote Address
Dian Ogilvie
Senior Vice President and Chief Environmental Officer
Toyota Motor Sales, U.S.A., Inc.
6th National Conference on Science, Policy and the Environment:
Energy for a Sustainable and Secure Future
The National Council for Science and the Environment
January 27, 2006
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Good morning!
Thank you for your invitation to speak at NCSE.
Now, I have to admit -- when I saw the lineup of speakers -- that I was a bit overwhelmed. You see, I am not a scientist and certainly don’t claim to be a technical expert.
In fact, I think the last time I tried to show off my technical skills in front of an audience was in high school when I was a finalist in the Orange County Math Contest, and that didn’t turn out so well.
So, I was relieved to get the e-mail warning speakers to refrain from using technical jargon. I promise I won’t use “renewable portfolio standard” even once in my remarks, especially since I’m not really sure what that means.
But what I think I can share with you is a glimpse into how a big, multinational company can adopt a lofty environmental vision and turn it into meaningful and measureable actions. And how these, in turn, can create a culture where each associate is committed to doing his or her part to improve our environment.
For Toyota, the root of our environmental commitment goes back to the time when Toyota was established to make looms for the textile industry. As they grew, these operations took shape on two strong cultural pillars: continuous improvement and respect for people.
These were, and are, the dominant themes of our thinking as a company. We call this The Toyota Way.
Continuous improvement means that we work to do better today what we did yesterday, and that tomorrow we’ll work harder to do it better still. In the simplest terms – there is no best, only better.
And respect for people means not only respect for people’s cultures and ideas, but for the environments in which they live as well. This is what drives Toyota’s environmental commitment around the world.
Our current and next-generation products were born out of ideas developed in the early 1990s and fathered by a commitment to make Toyota a leader among the world’s automakers in environmental responsibility.
Two forces combined to create this commitment.
First, the recognition that auto production and the global environment were on a collision course. The world already has more than three-quarters of a billion cars and trucks. And auto plants around the world are adding nearly 170,000 more to this total each day.
The second force behind this commitment is our recognition of the global energy situation. Petroleum resources are not only finite, they’re concentrated in parts of the world that are politically sensitive, like the Middle East and Nigeria, or where they are environmentally fragile, such as in Alaska and along America’s coastal waters.
In the early 1990s, Toyota’s then-chairman Eiji Toyoda regularly asked at Board meetings whether the company should continue building cars as it had in the past. Dr. Toyoda, a man famously concerned about the environment, challenged the company to do business in a new way for the 21st century.
Now, when the leaders of your company have that kind of vision, and suggest a new kind of commitment, you know they mean business.
So, Toyota formed policies and guidelines regarding environmental improvements into what we call our Earth Charter. It was created in 1992 and has been updated steadily. In it, we aim for growth in harmony with the environment, and set a long-term challenge to achieve zero emissions in all areas of business activities.
The Earth Charter provides for pursuit of all technologies that enable the environment and the economy to coexist. It requires that we take action voluntarily and that we not only observe global, regional and national regulation but that we never cease reducing the impact of our operations and our products on the environment.
And, our Charter requires that we continue to build relationships with governments, businesses and a wide variety of organizations like yours that share a commitment to environmental progress.
One requirement that flowed from the Earth Charter was that every operation worldwide create an action plan with specific goals and dates for reducing its footprint on the environment. These specific plans were needed to turn ideas into action and concepts into concrete. If you mean it, measure it!
Aggressive quantifiable targets were set for reduction of energy and water use, waste reduction and recycling, among others. These goals required all our people to begin to think differently about their specific jobs.
For example, we sat down with the real estate department and explained what was needed to meet the targets in energy savings from new buildings we were planning. And of course we were told, “That’s fine, but we have a limited budget.”
But we challenged their thinking and encouraged them to take a closer look at costs. They came back with a design for a building that cost 10 percent less by using recycled materials…and determining that 95 percent of construction materials could be recycled.
Or our parts logistics team that substituted wooden pallets with returnable metal containers, saving about 9,000 trees a year in the process.
From projects like these where people were challenged to think about their jobs differently came a gradual change in the company’s culture. Little things changed and began to be noticed.
Light switches began to be replaced with the motion-sensing kind that turn out the lights when nobody’s around. Receptacles appeared on the company grounds for metal and plastic and other recyclables. At some facilities, food waste from the company cafeteria began to be composted – one ton a day! – and used to feed the plantings in the office landscaping. And while that compost system was under development, team members went so far as to take home their lunch bags and trash to reduce landfill waste.
Others saw their company sponsoring a project like ZEV-NET, the California shared-use car commuter program that’s the biggest in the nation.
And, through our partnership with the National Environmental Education and Training Foundation, over two thousand of our folks volunteered for National Public Lands Day, to pitch in to make parks cleaner, better and more beautiful.
It’s a lot of little things, tens of dozens of them, that taken together tell the company’s people at all levels that there’s something going on here, and that no detail is too small to consider when dealing with the environment.
Employees may ignore these at first, but then they become interested, and then engaged, and then excited. Finally, there comes a moment when everybody gets it.
And from that moment, nobody would dream of dropping a soda can or a newspaper or a piece of office paper into a waste basket, or casually discarding a battery, or driving three blocks to lunch.
I am not going to claim that we are there yet – but we are well on our way!
One area we’ve targeted directly in this environmental effort is recycling our cars and trucks. Right now, our vehicles are 85 percent recyclable, and we’re on our way toward a goal of 95 percent.
Our scientists have developed biodegradable plastic made from a variety of vegetable matter including sweet potatoes and sugar cane. Is this the first step toward an edible car? No, but Toyota’s patented bio-plastics are being used for some of our interior car parts – like automobile floor mats and spare-tire covers. Toyota’s first plant for this purpose was designed to produce the new material at the rate of a thousand tons a year.
As a result of the emerging culture to reduce waste and improve recycling, vigorous competition developed among environmental coordinators in Toyota’s U.S. plants and offices to see who would take home the awards for annual improvement.
One result has been that our overall land disposal of waste has declined by 86 percent, and eight of our facilities have achieved a “zero-landfill” objective. These agile environmental competitors have helped slash our energy consumption at North American facilities by 15 percent from 2000 levels, and aim for another five percent by 2007.
They gave us the ability to celebrate seven straight years with no hazmat or dangerous goods violations. And, they helped to make sure that a new building complex at our California sales headquarters is covered by a solar collector array that is one of the nation’s largest.
It earned the 2005 Energy Star Award from the EPA and Department of Energy. With 624,000 square feet of space housing 2,000 people, this complex is the largest ever to receive a Gold Level Certification from the U.S. Green Building Council’s “LEED” rating system.
The knowledge we gained from this project has been applied to the construction of a new office building here in Washington, and a port facility in Oregon, and shared with an auto dealership now under construction in Texas.
It has spawned an objective to make our new truck plant in San Antonio Texas – our most environmentally advanced facility worldwide. We’ve also acted as consultants for the people in Yellowstone Park charged with the construction of a new visitors center.
And I will let you in on a little secret: most of these efforts have also added powerfully to the bottom line.
Now, what did I forget?
Oh, yes, how about clean and energy-efficient cars and trucks?
Throughout the seventies, eighties and into the nineties, Toyota had been able to make steady improvement in the emissions and fuel consumption of its products. But in light of the objectives of the Earth Charter, steady improvement was not enough.
What was needed was a genuine breakthrough product – say, a powertrain different from the kind that had been powering cars and trucks for nearly a century. So, Toyota engineers went to work on a powertrain that would cut emissions by as much as 90 percent and provide twice the fuel mileage of the average vehicle on the road.
The result was the Prius hybrid.
I’d like to talk about it for a moment, because hybrid power has become very important to our company and our industry as well as to the environment.
The hybrid concept is now well beyond proving that a positive financial case can be made for the development of an environmentally sensible product.
You probably know that Prius uses two power sources, a normal gas engine and an electric motor, with a computer acting as an energy manager, choosing one or both power sources, depending on driving conditions.
The battery is recharged any time the car slows or the brakes are used. With these advances,the first-generation Prius produced far less emissions and far greater fuel economy than conventional cars.
Prius took hold rapidly in Japan where small cars are the norm, and was introduced in the United States in 2000.
We believe that when hybrid power came to the United States at the turn of the Millennium it launched a new era of innovation for the automotive industry. At the time, though, the concept was viewed by many as experimental…a kind of rolling science project. Some other automakers considered it a publicity stunt, and sat back to watch it flop.
But Toyota didn’t wait. And Prius didn’t flop.
With gasoline then selling for less than a dollar a gallon, our primary sales effort was based on the car’s environmental benefits and technical advances.
Our first marketing approaches were to friends of the environment and technology pioneers -- two groups that amounted to about 10 percent of the U.S. population. We also created lifestyle partnerships with organizations such as the American Lung Association, and through sponsorship of Earth Day events.
We gained celebrity endorsements from high-profile people such as Leonardo DiCaprio and Cameron Diaz, who were seen often driving around in their Priuses.
We began educating consumers to build awareness of our cleaner hybrid technology, and bring hybrid cars into the automotive mainstream. And to do that, it was necessary to deal with some persistent myths about hybrids:
But as much as consumers loved the great environmental benefits, they told us that they really wanted more power and more room.
Well – they are Americans!
So, in the next-generation Prius that was introduced in 2003, it moved from a compact sedan to mid-size and we added a big increase in acceleration.
But with the real magic of applied engineering, it was bigger, faster, cleaner -- a 30 percent improvement -- and got 15 percent better fuel economy. That’s no compromise!
First-year sales of this new model far outran our expectation and production, and had to be increased three times.
Throughout our introductions of both generations of Prius, we explained that hybrid technology is here to stay, and that other Toyota hybrid vehicles would follow. And so they have.
Last year we brought to market the world’s first hybrid luxury vehicle, the Lexus RX400h, and a hybrid version of our Toyota Highlander sport utility vehicle. Both provide more power and more room with far fewer emissions.
This year we’re adding a Lexus hybrid sedan and a hybrid version of the Toyota Camry, the nation’s best-selling family car.
With a four-cylinder engine powered by our Hybrid Synergy Drive, this car will have the performance of a V6 and deliver miles per gallon in the high 30s.
Toyota’s Hybrid Synergy Drive technology is being applied not only to four-cylinder engines, but to V-6 and V-8 gas engines and diesels. In fact, we feel so strongly about hybrid technology, we’ve just announced that our top-of-the-line Lexus LS will get a hybrid powertrain, as well.
The best news is that our competitors haven’t been standing still, either. Honda has three hybrids in the market. Ford has two, and three more on the way, and GM, Chrysler and Nissan are planning to introduce hybrids in the near future. Even Porsche and BMW are preparing to enter the arena.
Ford Motor Company purchased licenses for 20 Toyota patents on hybrid systems and control technology to develop its own hybrid powertrain, and Toyota hybrid components will be provided to Nissan. Toyota has offered to make our hybrid technology available to other manufacturers as well.
At Toyota, global president Watanabe has set a new goal: to sell one million hybrids a year worldwide early in the next decade. At our current rate of sales, that’s about 600,000 hybrids in the United States. And to achieve that goal, we will have to offer hybrid power systems in virtually all our vehicles, including the trucks that Americans love and need for work. That’s why we have 10 hybrids under development right now.
To us, it’s not a fad or a passing phase but a vital technology for the 21st century.
That’s what I meant when I said that when hybrid power arrived in America, it launched a new era of innovation for the automotive industry.
Our pioneering work in hybrid technology allowed us gain valuable attention for our brand; to reinforce our company’s reputation; and to demonstrate environmental responsibility. Good as they are, however, Prius and the Hybrid Synergy Drive aren’t enough to satisfy our commitment to environmental leadership.
And as proud as our people are of our environmental accomplishments, all of us know that there remains a tremendous amount to be done.
There are definitely problems yet to be solved.
One of the biggest? What comes next?
There is a lot of talk about hydrogen fuel cell vehicles and we are working hard on our own, but we’re not there yet, and I can’t even estimate when we will be ready for commercial applications.
We have six hydrogen fuel cell-powered vehicles being tested on the road in California in cooperation with universities and the California Fuel Cell Partnership. Engineers tell me there are serious technical obstacles to be overcome, including fuel storage and cold weather performance, not to mention the question of fuel-supply infrastructure.
We’re spending a lot of money and brainpower to find the answers. In fact, we invest globally seven billion dollars a year in research and development, equal to about $900 for each car and truck we build, and a good portion of that is directed to alternative-fuel technologies.
But at current development and costs, we don’t see a market for many fuel cell vehicles right now.
This brings up the issue of product diversity and how in order to be successful, we need to make the cars that people want to buy. This ties into consumer diversity.
Their needs are different. We have customers who need to pull a big boat or construction trailer, or haul three rows of people or a truckload of bricks or lumber. That means big vehicles with big horsepower and lots of torque.
Within the limits of engine technology, we’re aiming to provide these capabilities with the least input of fuel and the least output of emissions. But remembering what Toyota engineers were able to do in response to demands for better performance from our first hybrids, I have confidence that eventually they will find the same kind of elegant environmental solutions for these extraordinary power needs as they have for mainstream needs.
The last issue facing the auto industry is where many of you come in. We need more and better affiliations and more and better cooperation between all the stakeholders on environmental matters, whether it be our competitors, suppliers, fuel producers, regulators, academia or the scientific community.
Obviously, the amount of intellectual horsepower required for environmental leadership is not found in any one company. But Toyota is blessed with numerous positive relationships with such stakeholders, including the agencies that regulate us.
Our fuel cell vehicle program, for example, is being developed in cooperation with the University of California at Davis and at Irvine. Most recently, Toyota began working with the Savannah River National Lab at a new Center for Hydrogen Research to develop hydrogen fuel storage systems for cars.
And true to the promise of Toyota’s Earth Charter, we will continue to seek and build more relationships like these.
We need to meet in a spirit of shared goals and mutual effort, leaving our ID badges and our egos at the door. The stakes are very high for our companies, our customers and our planet.
So, we look forward to advancing these partnerships and this cooperation and to further building our business case for environmental responsibility.
Like any great vision, Toyota’s environmental goals are only as good as the people carrying out the actions. But thanks to our Earth Charter and the principles of the Toyota Way – continuous improvement and respect for people – finding environmental solutions has become part of our corporate DNA.
Don’t get me wrong -- we know we are barely out of the starting blocks in the race to be an environmental leader, but we have made a start and we mean to go on.
I’d like to challenge each of you here this morning to take a look at how the environment figures into your organization’s DNA.
Think big, and think small, and then turn ideas into action. Every change you make benefits us all.
Thank you.
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